B-181639, NOV 22, 1974

B-181639, NOV 22, 1974

FAILURE OF LOW BIDDER TO ACKNOWLEDGE AMENDMENT INCREASING DAILY RATE OF LIQUIDATED DAMAGES FROM $15 TO $50 UNDER INVITATION FOR BIDS FOR DEMOLITION AND REMOVAL OF 26 BUILDINGS WITHIN 365 DAYS FROM NOTICE TO PROCEED MAY NOT BE WAIVED AS MINOR INFORMALITY OR IRREGULARITY IN BID SINCE AMENDMENT AFFECTED PRICE AND ACCEPTANCE OF LOW BID WOULD HAVE BEEN PREJUDICIAL TO OTHER BIDDERS.

ARNOLD SPIRTAS COMPANY:

THE ARNOLD SPIRTAS COMPANY (SPIRTAS) PROTESTS THE REJECTION OF ITS BID AND THE SUBSEQUENT AWARD OF A CONTRACT TO ANOTHER BIDDER UNDER INVITATION FOR BIDS (IFB) N62472-74-B-6175, ISSUED BY THE NORTHERN DIVISION, NAVAL FACILITIES ENGINEERING COMMAND.

THE INVITATION SOLICITED BIDS FOR THE DEMOLITION AND REMOVAL OF 26 BUILDINGS AT THE NAVAL BASE, GREAT LAKES, ILLINOIS. PERFORMANCE WAS TO BE ACCOMPLISHED WITHIN 365 CALENDAR DAYS AFTER RECEIPT OF THE NOTICE TO PROCEED WHICH THE INVITATION STATED WOULD NOT BE ISSUED UNTIL APPROXIMATELY NOVEMBER 1, 1974. INITIALLY, LIQUIDATED DAMAGES WERE TO BE ASSESSED AT A RATE OF $15 PER CALENDAR DAY FOR FAILURE TO COMPLETE ALL THE WORK WITHIN THE TIME SPECIFIED. AMENDMENT NO. 1 TO THE INVITATION INCREASED THE DAMAGES FOR DELAY FROM $15 TO $50 PER CALENDAR DAY.

AT BID OPENING ON MAY 22, SPIRTAS WAS THE LOW BIDDER AT $82,900; HOWEVER, THE COMPANY FAILED TO ACKNOWLEDGE RECEIPT OF AMENDMENT NO. 1. A SPIRTAS REPRESENTATIVE PRESENT AT THE OPENING IMMEDIATELY OFFERED TO CORRECT THE ERROR. BY LETTER DATED MAY 22, 1974, SPIRTAS MADE WRITTEN ACKNOWLEDGMENT OF THE AMENDMENT AND REAFFIRMED ITS BID PRICE. HOWEVER, THE CONTRACTING OFFICER DETERMINED THAT THE FAILURE TO ACKNOWLEDGE RECEIPT OF AMENDMENT NO. 1 COULD NOT BE CORRECTED OR WAIVED AS A MINOR INFORMALITY SINCE IT WAS AN ERROR WHICH AFFECTED PRICE AND, THEREFORE, HE REJECTED THE SPIRTAS BID. THE CONTRACT WAS SUBSEQUENTLY AWARDED IN THE AMOUNT OF $97,940 TO ANOTHER BIDDER.

SPIRTAS CONTENDS THAT ITS FAILURE TO ACKNOWLEDGE THE AMENDMENT WAS A TECHNICAL ERROR WHICH DID NOT REQUIRE MANDATORY REJECTION OF ITS BID. NOTED THAT THE INVITATION STATED THAT THE "FAILURE TO ACKNOWLEDGE EACH AND EVERY AMENDMENT MAY CONSTITUTE GROUNDS FOR REJECTION OF THE BID." SINCE IT BELIEVED THAT THE WORK COULD BE COMPLETED IN SUBSTANTIALLY LESS TIME THAN PROVIDED FOR UNDER THE INVITATION, SPIRTAS ALLEGES THAT THE INCREASE IN LIQUIDATED DAMAGES WOULD HAVE HAD LITTLE, IF ANY, EFFECT ON PERFORMANCE OR THE PRICES BID. THEREFORE, IT VIEWS THE LACK OF ACKNOWLEDGMENT AS A MINOR INFORMALITY WHICH COULD BE CORRECTED OR WAIVED. FINALLY, SPIRTAS MAINTAINS THAT, IN LIGHT OF THE $15,040 DIFFERENCE BETWEEN ITS LOW BID AND THE AWARDED PRICE, WAIVER OR CORRECTION WOULD BE TO THE GOVERNMENT'S ADVANTAGE.

SECTION 2-405 OF THE ARMED SERVICES PROCUREMENT REGULATION (1973 ED.), PROVIDES THAT THE FAILURE OF A BIDDER TO ACKNOWLEDGE RECEIPT OF AN AMENDMENT MAY NOT BE REGARDED AS A WAIVABLE OR CORRECTABLE MINOR INFORMALITY OR IRREGULARITY IN THE BID WHEN THE AMENDMENT AFFECTS THE PRICE, QUANTITY, OR QUALITY OF THE PROCUREMENT IN OTHER THAN A "TRIVIAL OR NEGLIGIBLE" MANNER. IN OUR DECISION 53 COMP. GEN. 64 (1973), WE STATED:

"*** THE BASIS FOR THIS RULE IS THE PRINCIPLE THAT THE ACCEPTANCE OF A BID WHICH DISREGARDS A MATERIAL PROVISION OF AN INVITATION, AS AMENDED, WOULD BE PREJUDICIAL TO OTHER BIDDERS. CLARIFICATION OF THE BID AFTER OPENING MAY NOT BE PERMITTED BECAUSE THE BIDDER IN SUCH CIRCUMSTANCES WOULD HAVE THE OPTION TO DECIDE TO BECOME ELIGIBLE BY FURNISHING EXTRANEOUS EVIDENCE THAT THE AMENDMENT HAD BEEN CONSIDERED, OR TO AVOID AWARD BY REMAINING SILENT. 41 COMP. GEN. 550 (1962) AND CASES CITED THEREIN."

IN 45 COMP. GEN. 604 (1966), OUR OFFICE DID NOT QUESTION AN AWARD TO THE LOW BIDDER UNDER A CONSTRUCTION INVITATION WHO FAILED TO ACKNOWLEDGE IN ITS BID AN ADDENDUM INCREASING THE DAILY RATE OF LIQUIDATED DAMAGES FROM $85 TO $200 FOR DELAY IN THE COMPLETION OF THE WORK. HOWEVER, UNLIKE HERE, THE LIQUIDATED DAMAGES PROVISION WAS UNENFORCEABLE AND THE OTHER BIDDERS WERE NOT PREJUDICED; THEREFORE, THE LACK OF ACKNOWLEDGMENT WAS TREATED AS A MINOR INFORMALITY.

IN THIS CASE, THE RECORD REVEALS THAT THE LIQUIDATED DAMAGES WERE INCREASED BY AMENDMENT NO. 1 TO CORRECT AN ERROR IN THE ORIGINAL INVITATION WHICH HAD MISTAKENLY INCLUDED THE $15 FIGURE. WE CONCUR WITH THE POSITION TAKEN BY THE NAVY IN THAT THE BIDDER, FACED WITH AN INCREASE IN LIQUIDATED DAMAGES, WOULD HAVE REASSESSED ITS ABILITY TO MEET THE SPECIFIED PERFORMANCE DATES AND WOULD HAVE CONSIDERED THE INCREASED RATE OF LIQUIDATED DAMAGES. THUS, THE NAVY REGARDS THE FAILURE TO ACKNOWLEDGE THE AMENDMENT AS MATERIAL AND, THEREFORE, NOT WAIVABLE. IN THIS REGARD, WE HAVE PREVIOUSLY VIEWED AS MATERIAL THE FAILURE TO ACKNOWLEDGE AN ADDENDUM WHICH PROVIDED FOR LIQUIDATED DAMAGES AND A SHORTENED PERFORMANCE PERIOD. B-178171, MAY 31, 1973.

THE POSSIBILITY THAT THE WORK COULD BE COMPLETED IN SUBSTANTIALLY LESS TIME THAN PROVIDED FOR IN THE INVITATION IS OF NO CONSEQUENCE SINCE THE PURPOSE OF THE LIQUIDATED DAMAGES PROVISION IS TO PROTECT THE GOVERNMENT AGAINST THE OTHER CONCEIVABLE POSSIBILITY THAT THE CONTRACTOR WILL EXPERIENCE INEXCUSABLE DELAYS. NO MATTER WHAT A PROSPECTIVE CONTRACTOR MAINTAINS INSOFAR AS EARLY PERFORMANCE IS CONCERNED, THE FACT REMAINS THAT THE ONLY OBLIGATION ON THE CONTRACTOR FOR COMPLETION OF THE WORK IS THE PRESCRIBED DELIVERY SCHEDULE.

MOREOVER, ALTHOUGH THE INVITATION STATED THAT THE FAILURE TO MAKE PROPER ACKNOWLEDGMENT "MAY" CONSTITUTE GROUNDS FOR REJECTION OF A BID, A CONTRACTING OFFICER CANNOT WAIVE SUCH A FAILURE SOLELY AT HIS OWN DISCRETION, BUT ONLY WHEN LEGALLY PERMISSIBLE. SEE B-178640, JULY 31, 1973.

WHILE AN AWARD TO SPIRTAS WOULD HAVE REALIZED A SAVING TO THE GOVERNMENT, IT HAS BEEN OUR CONSISTENT POSITION THAT STRICT MAINTENANCE OF THE ESTABLISHED PRINCIPLES OF COMPETITIVE PROCUREMENT BY GOVERNMENT AGENCIES IS INFINITELY MORE IN THE PUBLIC INTEREST THAN FOR THE GOVERNMENT TO OBTAIN A PECUNIARY ADVANTAGE IN A PARTICULAR CASE BY VIOLATION OF THE RULES. 51 COMP. GEN. 370, 372 (1971).

ACCORDINGLY, THE PROTEST IS DENIED.